SEBI Eases Investor Accreditation Norms, Lets Fund Managers Certify Status

SEBI Moves Accreditation Checks Into the Fund Onboarding Process

The revised framework gives fund and portfolio managers a direct role in verifying investor accreditation, while retaining documentation and due-diligence obligations.

Managers can verify accreditation directly

SEBI has eased its accredited-investor framework by allowing managers to determine and record an investor’s status, alongside the existing route through recognised accreditation agencies. The new option applies to managers of Alternative Investment Funds (AIFs), asset management companies of Specialised Investment Funds (SIFs) and portfolio managers.

A manager can verify eligibility when an investor is onboarded or during a scheme’s tenure. That flexibility could reduce reliance on a separate certification step and make it easier to complete accreditation alongside other onboarding checks. For investors considering these services, it may simplify administration; it does not, by itself, determine whether an investment is suitable or attractive.

Validity and group recognition set the boundaries

Accreditation granted under the framework will remain valid for three years. It will also be recognised across managers belonging to the same corporate group, potentially reducing repeated verification where an investor deals with more than one manager within that group.

That recognition is not stated to extend across unrelated managers. Investors should therefore check whether a new manager falls within the same corporate group before assuming an existing accreditation can be used. The validity period also means status is not permanent: investors and managers will need to account for the three-year limit when considering ongoing or new relationships.

Record-keeping remains a manager responsibility

Managers using the new route must preserve supporting documents and verification records. The retention period runs for at least five years from accreditation, or until five years after the investor ceases to be associated with any scheme managed by them, whichever is later. This makes the change more than a convenience: managers will need processes that can evidence how eligibility was checked and when status was recorded.

For investors, documentary checks remain part of the process even if a separate accreditation agency is not involved. The framework places the verification function closer to the investment relationship, while requiring an audit trail that can support oversight and compliance.

LLPs and overseas residents receive specific treatment

The circular also clarifies that a limited liability partnership qualifies as an accredited investor only if each partner independently meets the prescribed eligibility criteria. This makes partner-level eligibility relevant to the LLP’s status rather than treating the entity as automatically accredited.

Persons resident outside India will be treated as deemed accredited investors and will not need a separate accreditation certificate. SEBI has made clear, however, that this does not remove AIFs’ and their managers’ anti-money laundering and client due-diligence obligations. The circular took effect immediately, so firms must apply the revised process while continuing those checks.

Key Highlights

• AIF, SIF and portfolio managers can verify accredited status as an alternative to recognised agencies.
• Verification can take place at onboarding or during a scheme’s tenure.
• Accreditation is valid for three years and is recognised among managers in the same corporate group.
• Managers must retain supporting records for the prescribed five-year period.
• Each LLP partner must independently satisfy eligibility criteria; overseas residents are deemed accredited.
• AML and client due-diligence obligations continue to apply.

Investor Note: The change may make accreditation more straightforward, but it does not remove eligibility checks or compliance safeguards. Investors should confirm how a manager will verify and document their status, and assess any investment on its own merits rather than treating accreditation as an endorsement.